Asia's billionaires get ready to retire: who will succeed them?

Asia’s ultra-wealthy business elites are facing their biggest challenge – successfully passing on their hard-earned fortunes to the next generation.

There’s an old Chinese proverb that states wealth does not pass three generations. Such a sentiment is set to be put to the test at a time when Asian businesses and entrepreneursare cashed up like never before, especially in China.

With companies such as China’s Alibaba, Dalian Wanda and Tencent, and India’s Reliance Industries and Wipro becoming commercial powerhouses – and others following in their slipstream – it is no surprise that the number of Asian billionaires is rising.

“We see that momentum keeping going,” says Harry Qin, PwC China’s consulting wealth and asset management lead partner. He adds that the report’s analysis shows that if current growth trends continue, the total wealth of Asia’s billionaires will overtake that of billionaires in the US in four years.

This comes off the back of an exceptional period of business for Chinese entrepreneurs, in particular. In 2016, the number of Asian billionaires rose by almost a quarter to 637, compared with 563 in the US and 342 in Europe.

The number of billionaires globally rose to 1542, with three in four of the newcomers coming from Asia’s two biggest economies, China and India. However, the net wealth of American billionaires – headlined by the likes of Amazon’s Jeff Bezos, Microsoft’s Bill Gates and Berkshire Hathaway’s Warren Buffett – is still the highest in the world.

Although Asia’s billionaires are typically younger than their Western counterparts, with 80 per cent of them aged under 70, many are now contemplating the end of their working careers. This ushers in a new era, according to Qin, who says many of China’s billionaires are first-generation success stories who have aggressively driven growth.

“However, they have not been spending a lot of time thinking about how to preserve their wealth, most particularly transferring their wealth to the second or third generations.”

While the importance of wealth-transfer strategies is becoming apparent, Qin says the financial services sector in Asia, including wealth management and family office providers, is not as mature as in the US, Europe and Australia.

“In mainland China, family office and private banking services for billionaires exist, but they are still focusing on selling financial services products and less on catered advisory solutions for those first-generation entrepreneurs.”